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Monday, 29 November 2010

The DFM General Index increased 0.9 percent, the most since Nov. 21, to 1,674.77 at the close in Dubai. Abu Dhabi’s measure retreated 0.7 percent, while Saudi Arabia’s Tadawul All Share Index rose 0.4 percent.

The following stocks gained or fell in the Gulf. Symbols are in parentheses.

Emaar Properties PJSC (EMAAR UH) advanced the most in more than a week, gaining 1.4 percent to 3.65 dirhams. Dubai’s property market, which fell more than 50 percent from its peak, has reached bottom and is moving toward recovery, according to Mohamed Alabbar, the chairman of the shiekhdom’s biggest developer.

Dubai International Capital LLC, an investment company owned by the emirate’s ruler, sought a two- month extension on a $1.25 billion loan maturing on Nov. 30, two people with knowledge of the discussions said.

The loan continues to pay the same interest as earlier and the extension will help Dubai International’s 26 creditor banks agree on new terms for $2.6 billion of debt that the company is seeking to alter, the people said, declining to be identified because the information is private. The loan, which was due to mature in June, was extended to Sept. 30 and then to Nov. 30.

A company spokeswoman could not immediately comment when contacted by Bloomberg News today.

Dubai Holding Commercial Operations Group LLC, a real estate and hospitality group owned by the emirate’s ruler, is seeking a one-month extension on a $555 million revolving credit line to get more time to agree on new terms, two people with knowledge of the matter said.

The loan will be extended until Dec. 31 and then rolled over into a new medium-term facility, the terms for which are still under discussion, said the people, who declined to be identified because the talks are private. An official for Dubai Holding LLC, the company’s parent, declined to comment.

Dubai Holding Commercial received a two-month extension on the loan in July at “commercial terms,” the company said at the time, and then got the maturity lengthened again to Nov. 30. Citigroup Inc., Royal Bank of Scotland Group Plc and Standard Chartered Plc provided the loan.

One year after the Dubai World debt meltdown we go back to Dubai to see if things have improved.

Looking down on a city in crisis

The idea for this show came from, quite simply, a similar show we did last year.

It became apparent very quickly back in November 2009 that Dubai World’s request for a freeze on its debt repayments was more than just an economic story … instead, it was the sudden unravelling of a city, a dream and a way of life.

Dubai had become a haven for so many – be they Western expats attempting to climb the corporate ladder, or migrant workers looking for a means to support their family. They’d come here, and now their existence was being threatened.

Not just because of Dubai World to be entirely fair, but because the truth about Dubai’s ability to deal with the economic slowdown had never been fully told. In late 2009, that truth was being not only told but shouted and broadcasted all over the world. So we came down here last year to report on the crisis as it happened … and felt it only right to come back one year on, to see what (if anything) had really changed.

The chairman of Emaar Properties, the United Arab Emirates' largest listed property firm and builder of the world's tallest tower, said on Monday the company had no intention of tapping the bond market again in 2010 or selling new shares in the company.

Mohammed Alabbar also told a conference in Dubai there were no plans to reduce the Dubai government's 31.2 percent stake.

"We have just finished our bonds. We have no intention of doing that again," Alabbar told reporters on the sidelines of the conference.

Dubai’s proposed sale of as much as $1.5 billion of Islamic bonds in Malaysia won’t appeal to most local funds unless the emirate obtains a rating, Mashreq Capital DIFC Ltd. and Nomura Asset Management Malaysia Sdn Bhd. said.

The government hired CIMB Investment Bank Bhd., a Kuala Lumpur-based unit of CIMB Group Holdings Bhd., the world’s top sukuk arranger this year, as a lead manager to sell between $1 billion and $1.5 billion of the securities, a person with knowledge of the plan said Nov. 24. Malaysian Prime Minister Najib Razak said Oct. 26 the Dubai Department of Finance is proposing a multi-currency sukuk program.

“I doubt they can get it done in any sort of size without a rating,” Abdul Kadir Hussain, who manages $2 billion of mainly Persian Gulf assets as chief executive officer of Mashreq Capital in Dubai, said in a response to e-mailed questions Nov. 25. “Normally Malaysian investors are relatively conservative and invest in very high grade type issuers.”

The Islamic finance sector had a mixed record of growth in assets and a steep decline in profits during the global credit crisis last year compared to 2008, according to a McKinsey and Company study issued last week in Bahrain.

Obtained exclusively by Gulf News, the authors of the report titled Global Competitiveness Landscape of Islamic Finance, showed that while profitability of all banks declined, the fall has been steeper for Islamic banks, largely due to higher provisions and lower investment income.

Higher investment losses are partly due to banks' greater exposure to risky assets such as real estate.

The Government of Dubai has set out the hard figures which show that the emirate has overcome the global economic crisis and is firmly in control of its financial situation.

The restructuring of the debt of Dubai World is complete and the conglomerate is now on a "sound financial footing" said Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of the Supreme Fiscal Committee and Chairman and Chief Executive of Emirates Airline and Group.

Dubai's sovereign debt is $30 billion, according to Mohammad Al Shaibani, Director-General of the Ruler's Court. This is a small amount relative to earlier speculation and can easily be managed by the emirate. The operating debts of government entities should not be too much of a concern as most are known to have strong operations which generate revenue, such as the Dubai Electricity and Water Authority.

Dubai took an unprecedented step towards openness yesterday with its first quarterly update on the local economy and restructurings at some of its biggest business groups. In attendance were Sheikh Ahmed bin Saeed Al Maktoum, the chairman of Emirates Airline and president of the Dubai Department of Civil Aviation; Ahmed Humaid al Tayer, the governor of the Dubai International Financial Centre; Mohammed al Shaibani, the director general of the Dubai Ruler's Court; and other top government officials. Sheikh Mohammed bin Rashid, the Vice President of the UAE and Ruler of Dubai, also attended.

Officials plan to repeat the exercise every three months, increasing transparency after complaints from analysts and other observers that the Government was not sufficiently forthcoming about debt restructurings and the state of the local economy. 'We continue to work towards improving the level of disclosure and transparency,' Sheikh Ahmed said. 'We are holding open dialogue forums like this one.'

Dubai Holding's private equity arm is expected to seek a fresh extension on the repayment of a US$1.25 billion (Dh4.59bn) loan when a debt restructuring deadline expires tomorrow, according to a source close to the negotiations.

Dubai International Capital (DIC) had previously sought and received two extensions on the loan to buy time for restructuring talks to progress. The second, which delayed repayment until the end of this month, was agreed on in September. DIC is looking to restructure repayment on total debts of $2.6bn.

Those talks are part of a broader shake-up at Dubai Holding, which has total debts of more than $9bn and numerous divisions that are looking at repayment extensions."

Sheikh Ahmed bin Saeed Al Maktoum, uncle of the Ruler and chairman of Emirates airlines, told a press conference: 'We are working on opening the capital of some of our leading companies to the public.'

The sheikh, who is also chairman of the Dubai Supreme Fiscal Committee which in charge of financial affairs, added that the emirate needed to 'regroup, review and reconsider some of our investments and re-challenge our competitive edge'.

The comments, made on the anniversary of Dubai's first admission of its debt crisis, caused shares in the state-controlled companies to drop."

Restructuring talks between The Investment Dar, a Kuwaiti finance house that owns Aston Martin, and its creditors have broken down over disagreements on how to resolve the company’s $3.8bn debt pile.

TID said it had accepted the resignation of the creditors’ coordinating committee after refusing to accept a proposal that would have seen creditors exchange KD475m ($1.7bn) of debt for a 90 per cent stake in the company, but leaving them still retaining a further KD600m of debt.

TID said the proposals were unfavourable. The company has “conservatively” valued its assets at about KD1.8bn.

Dubai is mulling the privatisation of home-grown corporate champions as a means to start paying down its estimated $110bn in debts, senior officials said.

The emirate is “working on opening the capital of some of our leading companies to the public,” Sheikh Ahmed bin Saeed Al Maktoum, chairman of Emirates Airlines and a three-man committee charged with plotting the emirate’s economic recovery, told reporters.

Mohammed al-Shaibani, director general of the ruler’s court and another member of the committee, said Dubai is currently working on proposals to sell off stakes in strategic domestic companies.